Tax · Corporation tax

Corporation Tax in 2026: the 19% and 25% rates, deadlines, penalties and the Marginal Relief trap

In the UK, companies work out their own profit tax — HMRC will never send you a bill. The rate depends on profits: 19% up to £50,000, 25% above £250,000, and a sliding Marginal Relief scale in between. The tax is due before the return, and a late return now costs £200 from day one. Here are the rules, in order.

Published 28 September 2026, 15:45 3 min read Editorial

Modern glass office buildings on a street in the City of London — Office buildings in the City of London. Corporation tax is paid by every company — from corporations to a one-director Ltd Photo: ONLYWAY NEWS

If you have a limited company — whether a corporation or a one-director Ltd run by a freelancer — you pay corporation tax on its profits. The 2026 rules: two rates, a sliding scale between them, payment due before the return, and noticeably more expensive penalties.

Who pays corporation tax?

The tax is paid by all limited companies, foreign companies with a UK branch or office, and unincorporated associations — clubs, co-operatives, societies. New Ltds are usually registered for the tax at the same time as they register with Companies House; if that step was missed, corporation tax is added to the business tax account separately. The key rule: HMRC does not send a bill. The company calculates the tax itself, pays it itself and reports it itself — forgetting does not mean not owing.

What are the rates in 2026?

The rates introduced on 1 April 2023 still apply. Profits up to £50,000 — the small profits rate of 19%. Profits above £250,000 — the main rate of 25%. Between £50,000 and £250,000 the rate rises gradually thanks to Marginal Relief: the closer to the upper threshold, the closer the effective rate gets to 25%. HMRC's official calculator works out the relief for your figures.

What is the Marginal Relief trap?

The £50,000 and £250,000 thresholds are not absolute. They are divided by the number of your 'associated' companies plus your own: with three associated companies the thresholds become £12,500 and £62,500 — and the small profits rate disappears much sooner than you might expect. The thresholds also shrink proportionally for accounting periods shorter than 12 months. Non-UK resident companies and close investment holding companies cannot claim Marginal Relief at all.

What profits are taxed?

Taxable profits are not just trading profits. They include investment income and chargeable gains — profit from selling assets for more than they cost: property, equipment, shares. Business expenses, capital allowances and tax reliefs — for example for research and development — reduce the bill.

When do you pay and when do you file?

The corporation tax paradox: you pay before you file. Payment is due 9 months and 1 day after the end of the company's accounting period. The CT600 return is due 12 months after the end of the same period. Example: the accounting year ended on 31 December 2026 — the tax is due by 1 October 2027, the return by 31 December 2027.

What do late returns cost?

Late filing penalties: one day late — £200, three months more — another £200. At 6 months HMRC estimates your bill itself and adds 10% of the unpaid tax; at 12 months — another 10%. And a separate trap for repeat offenders: file late three times in a row and the £200 penalties become £1,000 each.

What if the company is not trading?

A company with no activity can be treated as dormant for corporation tax — no returns are needed until trading resumes. But the status must be agreed with HMRC, not just assumed by silence: otherwise penalties accumulate for nothing.

What else to read?

How to open an Ltd for £100 in 24 hours — in our guide; when VAT registration becomes compulsory — here; and if you work for yourself without a company — the sole trader rules.

Sources